A flurry of mixed signals keep markets looking for direction – Month in Review: January 2024
Macroeconomic Environment Review
January 2024 brought a continuation of the mixed signals observed in December 2023, with equity and FX markets grappling with ongoing uncertainties. The currency markets remained volatile, with the US Dollar maintaining its dominance but facing challenges from resurgent currencies like the Euro. Though January started optimistically for equities, the month ended with some volatility as major central banks hinted at a less dovish tone than previously anticipated.
The US Dollar maintained its dominance in the foreign exchange market in January, benefiting from several factors. The Fed’s hawkish stance towards interest rates continued to attract investors seeking higher yields and a safe haven in turbulent times. The ongoing war in Ukraine further fueled risk aversion, driving investors towards the US currency. However, cracks began to appear in the Dollar’s reign as January progressed. The Euro, supported by signs of resilience in the Eurozone economy and a less dovish tone from the European Central Bank, staged a comeback. Furthermore, currencies like the Japanese Yen and the British Pound showed some signs of strength, fueled by positive economic data and central bank policy adjustments. This suggests that the greenback’s dominance might not be unchallenged throughout 2024. Other currencies, especially those tied to economies showing signs of strength or undergoing policy changes, could gain traction as the year progresses.
At the same time, equity markets entered January with a burst of optimism, mirroring positive sentiment at the year’s end. Hopes for a resilient US economy, easing inflation, and continued corporate earnings growth fueled the initial rally. Developed markets, led by the S&P 500 and the Dow Jones Industrial Average, delivered positive returns in the first part of the month. However, this optimism dimmed as the month progressed. Signals from major central banks, particularly the Federal Reserve, indicated a less dovish stance towards interest rate hikes than previously expected. This dampened investor sentiment, reminding them of the potential economic headwinds from tighter monetary policy.
Looking ahead, equity and foreign exchange markets are likely to remain volatile in the coming months. The path of central bank policy, the progress in the geopolitical landscape, and the overall health of the global economy will continue to be key factors affecting market movements. We believe that investors should brace themselves for a bumpy ride and carefully manage their risk exposure in this uncertain environment.
Monthly Performance Review
During January 2024, AENAON Syncro Strategies generated the following total returns net of fees:
Across the spectrum of our benchmark indices, our strategies’ performance during December was quite positive. As a comparison, the US S&P 500 equities index gained 1.59%, the Barclay Hedge Fund Index posted a 0.59% advance, the Barclay CTA Index added 0.40% while the other benchmark indices can be seen on the chart below.
Chart 1: Monthly Performance vs. Benchmark Indices – January 2024
Charts 2, 3 and 4: Inception-to-Date Performance vs. Benchmark Indices
You can always review our updated factsheets at the following Fundpeak links, with monthly performance updates and statistics since inception:
